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Coldstream Corp. is comparing two different capital structures. Plan I would result in Coldstream Corp. is comparing two different capital structures. Plan I would result
Coldstream Corp. is comparing two different capital structures. Plan I would result in Coldstream Corp. is comparing two different capital structures. Plan I would result in
shares of stock and $ in debt. Plan II would result in shares of stock
and $ in debt. The interest rate on the debt is percent.
a Ignoring taxes, compare both of these plans to an allequity plan assuming that EBIT
will be $ The allequity plan would result in shares of stock
outstanding. What is the EPS for each of these plans? Do not round intermediate
calculations and round your answers to decimal places, eg
b In part a what are the breakeven levels of EBIT for each plan as compared to that
for an allequity plan? Do not round intermediate calculations.
c Ignoring taxes, at what level of EBIT will EPS be identical for Plans I and IIDo not
round intermediate calculations.
d Assuming that the corporate tax rate is percent, what is the EPS of the firm? Do
not round intermediate calculations and round your answers to decimal places,
eg
d Assuming that the corporate tax rate is percent, what are the breakeven levels
of EBIT for each plan as compared to that for an allequity plan? Do not round
intermediate calculations.
d Assuming that the corporate tax rate is percent, at what level of EBIT will EPS be
identical for Plans I and IIDo not round intermediate calculations.
shares of stock and $ in debt. Plan II would result in shares of stock
and $ in debt. The interest rate on the debt is percent.
a Ignoring taxes, compare both of these plans to an allequity plan assuming that EBIT
will be $ The allequity plan would result in shares of stock
outstanding. What is the EPS for each of these plans? Do not round intermediate
calculations and round your answers to decimal places, eg
b In part a what are the breakeven levels of EBIT for each plan as compared to that
for an allequity plan? Do not round intermediate calculations.
c Ignoring taxes, at what level of EBIT will EPS be identical for Plans I and IIDo not
round intermediate calculations.
d Assuming that the corporate tax rate is percent, what is the EPS of the firm? Do
not round intermediate calculations and round your answers to decimal places,
eg
d Assuming that the corporate tax rate is percent, what are the breakeven levels
of EBIT for each plan as compared to that for an allequity plan? Do not round
intermediate calculations.
d Assuming that the corporate tax rate is percent, at what level of EBIT will EPS be
identical for Plans I and IIDo not round intermediate calculations.
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